My spouse and I are retired. Both are reimbursed for the monthly Medicare payments. My ex-employer deducts it from my taxable gross. My spouse's ex-employer says it is taxable. Who is correct? Thanks.
You can generally exclude the value of accident or health benefits you provide to an employee from the employee's wages, including a retired employee.
This exclusion also applies to payments an employer makes
directly or indirectly to an employee under an
accident or health plan for employees -- that
is, the payments or reimbursements of medical
expenses. Medical expenses are those that are
usually allowed for the medical expense deduction
on Schedule A. Since the Medicare premium payments
you pay are allowable medical expenses on Schedule
A, their reimbursement can be tax-free.
Be aware that each employer may maintain different rules on reimbursable medical expenses. It may be that your wife's former employer discriminates in its reimbursements. If it doesn't treat all employees equally, the reimbursement should be income to her.